Question (Q): Agent banking is now being considered as a cost-effective banking approach particularly in the least developed areas. Could you please explain the journey of agent-based banking service of your bank?
Answer (A): Bank Asia PLC pioneered Agent Banking and rolled out the specialised banking service in Bangladesh in January 2014.
Agent Banking is entirely a cost-effective banking approach, particularly in the least developed areas. The objective of this specialized banking is to tap the untapped potentiality in rural economy by reaching the unreached, reduce discrimination against people irrespective of socio-economic, geographic, cultural, educational and demographic variabilities, expedite the drive of financial inclusion and promote financial literacy among excluded urban and rural masses and make banking service easy, faster and hassle-free with the help of technology-driven digital services at the doorsteps of people. Bank Asia is positively progressing with this goal in sight. Our footprint is there in almost every corner of the country with our 5025 agent outlets and 28,500 micro-merchants. We covered 64 districts, 534 Upazilas, 4139 unions to take banking services to the doorsteps of people. About 7 million customers are enjoying Bank Asia services with all kinds of banking facilities.
Q. Please share with us the difference between traditional and agent banking affairs?
A: The agent Banking system is fully digitalised and run by a tech-based customer authentication system. It is mainly a 3-party operated banking system approved by Bangladesh Bank where the Bank has almost no-cost set-up responsibilities. Its operational system and resource management are relatively cost-effective and hassle-free, and run by a small size of moderate educated local staffs appointed by Agents in rural periphery. Besides, service points are in the closest proximity of customers. All these things are almost missing in the traditional banking system.
Q: When did your bank start agent banking services and why?
A: Bank Asia started journey in January 2014 by setting up its first agent outlet at Bhabanipur of Sirajdikhan upazila in Munshiganj district. Prior to introducing this specialised service, Bank Asia started extending banking support to a large group of marginalised people under the government's `Ekti Bari Ekti Khamar project with software assistance which ultimately inspired the bank to develop a specialized banking system to ensure banking rights to all countrymen. Our motto was to facilitate banking services within the proximity of people, make it accessible easily, create an ecology within rural settings for better financing and transaction of services, promote digital financial services and reinforce the government's drive to achieve sustainable development goals. After the journey of 11 years we are happy to see we are in the right direction and 31 commercial banks joined hands to promote agent banking and ensure banking services to the doorsteps of the people.
Q: How many agent-banking outlets does your bank have so far and what is their urban-rural ratio?
A: Bank Asia PLC has 5025 Agent outlets across the country with 92% rural and 8% urban coverage. Besides, we have around 28,500 Micro Merchants in rural areas to reach out to the people with banking services.
Q: Do you really think agent banking services help expand commercial banks' service network among the unbanked people in a faster and low-cost way? Please answer with an example of your bank?
A: The main philosophy of Agent Banking is to bring un-banked population under the coverage of financial inclusion and ensure their right to banking in a cost-effective manner. Bank Asia having pioneered in this specialized banking service in the country is extending banking services through its agent outlets and micro-merchant points in the remotest geographical locations. To make the service low-cost we have developed an eco-system in collaboration with development partners, government institutions as well as various financial and tech-based institutions.
In this channel 3.3 million (33 lakh) customers are extreme poor and marginalized who lives on the allowance from government. We are helping the government free of cost to ensure its various social safety-net payments to beneficiaries. Of our total customers, 64% are women who were out of banking domain. Now they are enjoying banking services at their door-steps. Low account maintenance, processing and transaction costs are making agent banking services very popular to people.
Q: Many people term agent banking as a key deposit-mobilisation platform in the banking sector. Could you please share the performance of your bank's agent banking outlets in terms of deposit collection and credit disbursement in recent years?
A: Many people have many philosophies. We think banks came forward with this specialized service to ensure safety and security of money of general people. It is ultimately helping the nation calculate its actual micro economy size. Public deposits in Bank Asia's Agent Banking channel stood at Tk.5,500 crore mainly deposited by rural people who were so far unbanked. The droplets of their deposits are ultimately being sedimented on the baseline of our potential rural economy. Besides, people are taking loans from this deposits to generate fresh revenue in their personal economy. In recent years we extended agriculture loans to 59,000 farmers and 6550 plus SME entrepreneurs through our Agent Banking Channel.
Q: Please tell us about the growth in advances of your bank through agent banking along with the account numbers of male users and female users?
A: Bank Asia has been witnessing a positive growth in advances over the years in Agent Banking. Currently, 4.4 million or 64% of our total customers of 7 million are women.
Q: Please tell us about the growth in deposits and advances in agent banking and their contributions to your bank's entire deposit and lending portfolios?
A: Bank Asia Agent Banking has BDT 55,689 million in deposit while the total bank deposits stand at BDT 416,612 million i.e. 13.37% of total bank deposits is in agent banking. The Bank's Agent Banking channel disbursed above BDT 15,500 million in rural areas.
Q: What is your bank's plan in view of the agent banking in the last two or three years?
A: Bank Asia Agent Banking deployed field level officials who assess market potentiality under the jurisdiction of Agent points, provide business plans and work in line with this to tap the local opportunity in terms of account, deposit and assets. Like the branch target, agent outlets are also given specific targets.
Q: What are the major challenges that need to be overcome for smooth operation and expansion of agent banking across the country?
A: Agents grow their business gradually but their income tax on commission starts from initial days whatever amount they earn. Agent's income tax should be calculated based on profit, not income as currently calculated as it's a business for agents.
Q: Is lending through agent banking too risky as far as NPL (non-performing loan) is concerned?
A: Lending through agents is direct lending to low-earning groups of customers in the remotest corners of the country. These loans help them carry out agricultural activities and SME business in a better way. Banks have to engage more human resources for disbursement of these small loans and collection as well. If the bank and agents can make extra efforts for monitoring, NPLs will not be a challenge at all.
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